Tax Revenge in Kansas

Republicans and unions raise rates higher than in Massachusetts.

 The press accounts gleefully talk of how “moderate Republicans” joined with Democrats to raise taxes to address exploding state deficits. But substitute “Republicans backed by teachers unions” for moderate Republicans, and the real picture comes into focus.
At bottom the Kansas tax vote was as much about unions getting even with the Governor over his education reforms, which included making it easier to fire bad teachers.
.. the 2012 tax cuts that reduced the top rate on personal income taxes to 4.9% from 6.45% and eliminated income tax for small businesses filing as individuals.
.. Mr. Brownback was unlucky in his timing, given the hits to the agricultural and energy industries that count for much of the state economy.
.. Mr. Brownback’s reform mistake was that in eliminating taxes on “pass-through” small businesses, the Governor created a loophole that allowed law firms, accounting agencies, consultants and many others to declare wage income to be business profit and pay little or nothing. This caused lower tax revenues than Mr. Brownback predicted
.. public unions support the state GOP’s liberal wing.
.. The one relevant Kansas lesson is that Republicans in Washington need to be careful how they write any tax reform for “pass-through” businesses. One way to do that is to avoid letting pass-through tax rates get too much lower than rates on wage and salary income

By Trashing Mexico, Trump Hurts the U.S.

Without Nafta, American businesses would lose protection from populism south of the border.

 In contrast, Mr. Trump’s approach seems almost designed to help elect an anti-American, pro-Castro populist, Andrés Manuel López Obrador, to the Mexican presidency in 2018.
.. Today’s illegal immigrants are coming primarily from Central America. Washington should cooperate with Mexico to create a multistage defense. Working with Mexico to strengthen law enforcement, the rule of law, and intelligence would leave both countries better positioned to stop drug traffickers, criminals, human smugglers and terrorists.Insulting Mexico, on the other hand, will make it impossible for politicians there to work with Yankee gringos. A hostile Mexico can ignore the flow of people northward, while American policies that weaken investment and growth in Mexico simply create more incentives for Mexicans to migrate to the U.S.

.. Mr. Trump’s great wall would be a waste of money, as conservative Republicans from border states now acknowledge. A combination of fencing, additional border police, electronic surveillance and other intelligence tools would stop illegal immigration more effectively and at a lower cost.

.. because Nafta’s energy terms refer to Mexico’s constitution, American investors are now protected against a populist reversal of Mexican policy—but only as long as the U.S. remains in Nafta.
.. U.S. producers seeking to compete with Asian and European manufacturers now transfer components across North American borders up to 14 times in the process of completing final goods. More than 30% of Mexico’s exports to the U.S. contribute to the integrated auto sector.
..Yet when the Manufacturers Alliance for Productivity and Innovation recalculated trade statistics to count only the value added by each country, the U.S. had a surplus in manufactured goods with Mexico and Canada.

.. Six million U.S. jobs depend on exports to Mexico, with workers in Texas, Michigan, Arizona and Louisiana particularly vulnerable to self-defeating economic nationalism.
.. the alliance of the three North American democracies—being energy self-sufficient with integrated infrastructure and efficient and secure borders—could offer the U.S. a resilient and powerful base from which to face global challenges.
.. William Seward, Lincoln’s secretary of state and the man with the vision to purchase Alaska, wrote in 1853 that someday Mexico, Canada and the U.S. would create a North American union, but only after a long process and solely through free choice. Seward fought for America’s national union while also promoting an internationalist vision.

TVA CEO: Clean Power Plan compliance, natural gas part of future strategy

President-elect Donald Trump campaigned on promises to revitalize the coal industry, but economic forces may be a bigger hurdle than regulation. According to the Times Free Press, the Clean Power Plan and the power sector’s slow transition to decarbonization aligns with TVA’s long-term strategy.

“We have been following a path that is consistent with the direction of the Clean Power Plan, but we’ve been following it based on what’s the best for our customers, and they happen to line up,” Johnson said. “We really have been following the plan that says if we modernize the fleet as we diversify, what is the best economic and rate path to follow? And that’s really what we will continue to do in every decision we make.”

Part of that plan includes an increasing reliance on natural gas, according to TVA’s IRP.

If prices remain under $4/MMBtu through 2030 and under $6/MMBtu after that, they would be “well in the money in the generation space,” he told Reuters. The utility’s future strategy leans heavily on natural gas as it moves away from coal plants.

Thugs and Kisses

The Russian Federation of 2016 is not the Soviet Union of 1986. True, it covers most of the same territory and is run by some of the same thugs. But the Marxist ideology is gone, and so is the superpower status. We’re talking about a more or less ordinary corrupt petrostate here, although admittedly a big one that happens to have nukes.

.. But today’s Russia isn’t Communist, or even leftist; it’s just an authoritarian state, with a cult of personality around its strongman, that showers benefits on an immensely wealthy oligarchy while brutally suppressing opposition and criticism.

And that, of course, is what many on the right admire.

.. Fuels account for more than two-thirds of its exports, manufactures barely a fifth.

.. Mr. Putin would actually have something to boast about if he had managed to diversify Russia’s exports. And this should have been possible: The old regime left behind a large cadre of highly skilled workers. In fact, Russian émigrés have been a key force behind Israel’s remarkable technology boom — and the Putin government appears to have no trouble recruiting talented hackers to break into Democratic National Committee files. But Russia wasn’t going to realize its technology potential under a regime where business success depends mainly on political connections.